Capstar Financial Holdings, Inc. (NASDAQ:CSTR) is about to trade ex-dividend in the next four days. You can purchase shares before the 9th of November in order to receive the dividend, which the company will pay on the 25th of November.
Capstar Financial Holdings’s next dividend payment will be US$0.05 per share. Last year, in total, the company distributed US$0.20 to shareholders. Last year’s total dividend payments show that Capstar Financial Holdings has a trailing yield of 1.8% on the current share price of $11.29. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Capstar Financial Holdings has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Capstar Financial Holdings is paying out just 19% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Capstar Financial Holdings’s earnings per share have been growing at 12% a year for the past five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the last two years, Capstar Financial Holdings has lifted its dividend by approximately 12% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
To Sum It Up
Should investors buy Capstar Financial Holdings for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Capstar Financial Holdings looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while Capstar Financial Holdings has an appealing dividend, it’s worth knowing the risks involved with this stock. In terms of investment risks, we’ve identified 2 warning signs with Capstar Financial Holdings and understanding them should be part of your investment process.
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.